Macroeconomic Objectives And Economic Growth - 1371 Words

macroeconomic objectives simultaneously? In answering the above question the author has considered the four macroeconomic objectives and these are: 1) Economic Growth Economic growth is the increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which includes inflation, or in real terms, which are adjusted for inflation. (Investopedia n.d) 2) Lower unemployment Lower unemployment means that any government fiscal body has increased revenue (more people paying taxes) combined with reduced expenditure (reduction in benefits claimants).Lowering unemployment becomes difficult when balanced against innovation and improved technology†¦show more content†¦(Global-rates.com 2014) 4) Avoiding balance of payment deficit The balance of payments is effectively the difference between the funds received by a country through exports and those paid by the same country for all international transactions. These international transactions include a) The exchange of merchandise (export and import of products) which is the balance of merchandise trade. b) The exchange of services, c) Any gifts or transfer payments that do not involve the exchange of goods and services d) The purchase of physical or financial capital assets The diagram show a circular flow of activity in the economy (Anosweb.encyclonomic n.d) How are these objectives related? All four elements noted above, i.e. economic growth, lower unemployment, lower inflation and avoiding balance of payment deficit are considered to be the sub sections to government fiscal and monetary policy, otherwise known as stabilising of the economy (e.g. full employment, control of inflation and equitable balance of payments) is one of the goals that government tend to achieve through manipulation of fiscal and monetary policies. Fiscal Policy relates to taxes and expenditures, monetary policy through financial markets and supply of credit, money and other financial assets. When these factors noted above are in place, it may encourage economic growth. (Market.com n.d.) Increased employment will enviably mean that unemployed people with fewer skills will either train to skill